XML 35 R24.htm IDEA: XBRL DOCUMENT
v3.19.1

Financial Instruments | 3 Months Ended
--- | ---
Mar. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments Disclosure [Text Block] | FINANCIAL INSTRUMENTS At March 31, 2019, the company had $2,750 million ($3,551 million at December 31, 2018) of held-to-maturity securities (primarily time deposits and money market funds) classified as cash equivalents, as these securities had maturities of three months or less at the time of purchase; and $18 million ($34 million at December 31, 2018) of held-to-maturity securities (primarily time deposits) classified as marketable securities as these securities had maturities of more than three months to less than one year at the time of purchase. The company’s investments in held-to-maturity securities are held at amortized cost, which approximates fair value. These securities are included in cash and cash equivalents, marketable securities, and other current assets in the Consolidated Balance Sheets. Derivative Instruments Objectives and Strategies for Holding Derivative Instruments In the ordinary course of business, the company enters into contractual arrangements (derivatives) to reduce its exposure to foreign currency, interest rate and commodity price risks. The company has established a variety of derivative programs to be utilized for financial risk management. These programs reflect varying levels of exposure coverage and time horizons based on an assessment of risk. Derivative programs have procedures and controls and are approved by the Corporate Financial Risk Management Committee, consistent with the company's financial risk management policies and guidelines. Derivative instruments used are forwards, options, futures and swaps. The company has not designated any non-derivatives as hedging instruments. The company's financial risk management procedures also address counterparty credit approval, limits and routine exposure monitoring and reporting. The counterparties to these contractual arrangements are major financial institutions and major commodity exchanges. The company is exposed to credit loss in the event of nonperformance by these counterparties. The company utilizes collateral support annex agreements with certain counterparties to limit its exposure to credit losses. The company anticipates performance by counterparties to these contracts and therefore no material loss is expected. Market and counterparty credit risks associated with these instruments are regularly reported to management. The notional amounts of the company's derivative instruments were as follows:
Notional Amounts (In millions) | March 31, 2019 | December 31, 2018
Derivatives designated as hedging instruments: |  |
Commodity contracts | $ | 351 |  | $ | 525 |
Derivatives not designated as hedging instruments: |  |  |  |
Foreign currency contracts | $ | 1,442 |  | $ | 2,057 |
Commodity contracts | $ | 125 |  | $ | 9 |
Foreign Currency Risk The company's objective in managing exposure to foreign currency fluctuations is to reduce earnings and cash flow volatility associated with foreign currency rate changes. Accordingly, the company enters into various contracts that change in value as foreign exchange rates change to protect the value of its existing foreign currency-denominated assets, liabilities, commitments and cash flows. The company routinely uses forward exchange contracts to offset its net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of its operations. The primary business objective of this hedging program is to maintain an approximately balanced position in foreign currencies so that exchange gains and losses resulting from exchange rate changes, after related tax effects, are minimized. The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues. The objective of the hedge program is to reduce earnings and cash flow volatility related to changes in foreign currency exchange rates. Commodity Price Risk Commodity price risk management programs serve to reduce exposure to price fluctuations on purchases of inventory such as corn, soybeans, soybean oil and soybean meal. The company enters into over-the-counter and exchange-traded derivative commodity instruments to hedge the commodity price risk associated with agricultural commodity exposures. Derivatives Designated as Cash Flow Hedges Commodity Contracts The company enters into over-the-counter and exchange-traded derivative commodity instruments, including options, futures and swaps, to hedge the commodity price risk associated with agriculture commodity exposures. While each risk management program has a different time maturity period, most programs currently do not extend beyond the next two-year period. Cash flow hedge results are reclassified into earnings during the same period in which the related exposure impacts earnings. Reclassifications are made sooner if it appears that a forecasted transaction is not probable of occurring. The following table summarizes the after-tax effect of cash flow hedges on accumulated other comprehensive loss:
| Three Months Ended March 31,
(In millions) | 2019 | 2018
Beginning balance | $ | (26 | ) | $ | (2 | )
Additions and revaluations of derivatives designated as cash flow hedges | 4 |  | 12 |
Clearance of hedge results to earnings | (3 | ) | (1 | )
Ending balance | $ | (25 | ) | $ | 9 |
At March 31, 2019, an after-tax net loss of $10 million is expected to be reclassified from accumulated other comprehensive loss into earnings over the next twelve months. Derivatives not Designated in Hedging Relationships Foreign Currency Contracts The company routinely uses forward exchange contracts to reduce its net exposure, by currency, related to foreign currency-denominated monetary assets and liabilities of its operations so that exchange gains and losses resulting from exchange rate changes are minimized. The netting of such exposures precludes the use of hedge accounting; however, the required revaluation of the forward contracts and the associated foreign currency-denominated monetary assets and liabilities intends to achieve a minimal earnings impact, after taxes. The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on the contracts offset changes in the USD value of the related foreign currency-denominated revenues. Commodity Contracts The company utilizes options, futures and swaps that are not designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of inventory such as corn, soybeans, soybean oil and soybean meal. Fair Value of Derivative Instruments Asset and liability derivatives subject to an enforceable master netting arrangement with the same counterparty are presented on a net basis in the interim Condensed Consolidated Balance Sheets. The presentation of the company's derivative assets and liabilities is as follows:
|  | March 31, 2019
(In millions) | Balance Sheet Location | Gross | Counterparty and Cash Collateral Netting 1 | Net Amounts Included in the Interim Condensed Consolidated Balance Sheet
Asset derivatives: |  |  |  |
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign currency contracts | Other current assets | $ | 58 |  | $ | (16 | ) | $ | 42 |
Total asset derivatives |  | $ | 58 |  | $ | (16 | ) | $ | 42 |
Liability derivatives: |  |  |  |  |
Derivatives not designated as hedging instruments: |  |  |  |  |  |
Foreign currency contracts | Accrued and other current liabilities | $ | 17 |  | $ | (14 | ) | $ | 3 |
Total liability derivatives |  | $ | 17 |  | $ | (14 | ) | $ | 3 |
|  | December 31, 2018
(In millions) | Balance Sheet Location | Gross | Counterparty and Cash Collateral Netting 1 | Net Amounts Included in the Interim Condensed Consolidated Balance Sheet
Asset derivatives: |  |  |  |
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign currency contracts | Other current assets | $ | 72 |  | $ | (35 | ) | $ | 37 |
Total asset derivatives |  | $ | 72 |  | $ | (35 | ) | $ | 37 |
Liability derivatives: |  |  |  |  |
Derivatives not designated as hedging instruments: |  |  |  |  |  |
Foreign currency contracts | Accrued and other current liabilities | $ | 21 |  | $ | (15 | ) | $ | 6 |
Total liability derivatives |  | $ | 21 |  | $ | (15 | ) | $ | 6 |
1. | Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.
Effect of Derivative Instruments
| Amount of Gain Recognized in OCI 1 - Pre-Tax
| Three Months Ended March 31,
(In millions) | 2019 | 2018
Derivatives designated as hedging instruments: |  |
Cash flow hedges: |  |
Commodity contracts | $ | 8 |  | $ | 16 |
Total derivatives designated as hedging instruments | 8 |  | 16 |
Total derivatives | $ | 8 |  | $ | 16 |
1. | OCI is defined as other comprehensive (loss) income.
| Amount of Gain (Loss) Recognized in Income - Pre-Tax 1
(In millions) | Three Months Ended March 31,
| 2019 | 2018
Derivatives designated as hedging instruments: |  |
Cash flow hedges: |  |
Commodity contracts 2 | $ | 4 |  | $ | 1 |
Total derivatives designated as hedging instruments | 4 |  | 1 |
Derivatives not designated as hedging instruments: |  |
Foreign currency contracts 3 | (9 | ) | (181 | )
Commodity contracts 2 | 7 |  | (3 | )
Total derivatives not designated as hedging instruments | (2 | ) | (184 | )
Total derivatives | $ | 2 |  | $ | (183 | )
1. | For cash flow hedges, this represents the portion of the gain (loss) reclassified from accumulated OCI into income during the period.
2. | Recorded in cost of goods sold.
3. | Gain recognized in sundry income - net was partially offset by the related gain on the foreign currency-denominated monetary assets and liabilities of the company's operations. See Note 7 for additional information.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
Name: | us-gaap_FinancialInstrumentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration